Every CD or DVD manufactured in the European Union would have to carry code designed to help track down pirated discs if proposals by media trade groups are adopted. The proposal was delivered to the European Union during a two-day piracy seminar in Madrid. If adopted, it would enable the sources of pirated discs made in the EU to be tracked down, say the industry groups, which include the Business Software Alliance (BSA) and the Motion Picture Association (MPA).

Along with the unique code, called a Source Identification Code, the groups want more power to retrieve information that would help them identify the original manufacturer or distributor of the infringing goods.

Other measures in the proposals include "genuinely deterrent penalties," a reasonable presumption of copyright ownership to avoid delays in court proceedings that in some cases allow pirates to escape justice, and more powers by copyright holders to seize and preserve evidence of piracy.

To back up their demands, the media groups claim that counterfeiting and piracy of copyrighted works "feeds a growing black economy in which criminal networks use piracy to fund other activities such as drug dealing, arms trading, money laundering and terrorism."

Dara MacGreevy, vice president of the MPA, said the measures are necessary to tackle a convergence of Internet piracy and physical piracy fueled by the falling cost of disc-duplication technology.

"Pirates are using the Internet to download illegal copies of movies and then burning them onto CD-ROMs or DVD-Recordables," he said.

MacGreevy cited a recent United Kingdom raid on a DVD-R factory that was allegedly making copies of "Spider-Man" and "Star Wars: Episode II" movies. The raid netted over 10,000 discs and 31 DVD burners.

A tool, not a threat

Lisa Peets, of law firm Covington & Burling, which acts as outside counsel for the BSA, was keen to dispel suggestions that code could be a threat to civil liberties.

"This would not allow us to track users," she said, "just the business where the disc was replicated." Peets noted that many disc manufacturers already use the codes, citing a figure of 80 percent.

Peets said the code would be helpful in two ways.

"First, it would be easier to identify illegitimate products--CDs that don't have a code would raise a red flag," she said. "Second, it would be easier to trace the source if each code is linked to the plant where it was made."

The software and media groups also want the process of being granted search orders to be made easier and cheaper throughout the European Union. Some countries already make the process relatively easy, said Peets, but not all.

"In some member states it costs 100,000 euros ($92,000) to obtain a search order, and in others it can take months to process the request, by which time there could be a leak," she said.

A stronger message

Problems also occur when the industry group filing the order loses the element of surprise.

"We had a case in France recently where we turned up at a company's premises with a search order, but they were one step ahead of us on every PC--deleting the files before we could get to them," said Peets.

The higher fines and damages that the BSA and other media groups are pushing for would hit copyright infringement much harder than current fines and would also target those buying counterfeit software, videos and songs.

"Part of the problem that rights holders face is that civil damages and criminal penalties on people caught infringing are often very small," said Peets. "So it means that a lot of these infringers make a business decision based on the fact that it is cheaper to infringe and take the risk of getting caught."

Under the proposals, infringers would be hit with "substantial" damages," said Peets. Companies and individuals who buy the counterfeit material would be fined an amount equal to the retail value of what has been stolen.

"Currently some courts may assess damages on the money that a counterfeiter has made," said Peets. "So a counterfeiter with a compilation of software worth $10,000 on one DVD but who sells it for $10 may be fined on the basis of that $10 profit."